scorecardresearch
Follow Us:
Sunday, September 19, 2021

Withdrawal of retro tax demands: ‘Irrevocable’ undertaking by cos to drop cases against government

Earlier this month, the Centre had brought in The Taxation Laws (Amendment) Act 2021 stating that no tax demand shall be raised for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012.

By: Express News Service | New Delhi |
Updated: August 29, 2021 1:24:16 am
retro tax, Income Tax department, Vodafone Vodafone, Finance Act, Indian express, Indian express news, Indian expressUnion Finance Minister Nirmala Sitharaman (File)

Following the decision to scrap the retrospective taxation provision, the Income Tax Department on Saturday released rules that will help close tax demands against companies such as Cairn Energy and Vodafone Plc.

The rules provide details for companies to give an ‘irrevocable’ undertaking to withdraw all legal cases against the government as well as an undertaking to not pursue any in future.

Earlier this month, the Centre had brought in The Taxation Laws (Amendment) Act 2021 stating that no tax demand shall be raised for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012.

The government had, in 2012, retrospectively amended the Income-tax Act. This was in response to a Supreme Court verdict, which had held that Vodafone cannot be taxed for a 2007 transaction that involved its purchase of a 67 per cent stake in Hutchison Whampoa for $11 billion. Later in 2014, the Centre used the same section to raise tax demand against Cairn Energy Plc for restructuring done in 2006. After the retrospective amendment moved by the UPA-led government in 2012, tax demands were raised in 17 cases, out of which tax amount of Rs 8,100 crore has been collected for four cases.

“The amendment made by 2021 Act also provides that the demand raised for offshore indirect transfer of Indian assets made before 28th May, 2012 (including the validation of demand provided under Section 119 of the Finance Act 2012) shall be nullified on fulfillment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc. shall be filed and such other conditions are fulfilled as may be prescribed,” the tax department said in a statement.

The amount paid/collected in these cases shall be refunded, without any interest, on fulfillment of the said conditions, it said, adding a draft of the undertaking is being released for comments.

The declaration provides for a company to “irrevocably withdraw, discontinue and not pursue” any present or future legal challenge against the tax demand.

The department has invited suggestions and comments on the draft notification of the rules, which can be submitted by September 4.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.

  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
Advertisement
Advertisement
Advertisement
Advertisement